Filed under: Real Estate
Now that the dust has settled and the rainy season is upon us, we can look a little closer at the recent City-wide reassessment. It’s always an event when this happens. People wait with baited breath…. they can’t sleep…. the anticipation is almost overwhelming! How much will my property value go up and what does that mean for my tax bill??????
It’s no secret, property values have dropped. Will your property taxes drop accordingly? This is just an educated guess….. NO !!! With the slumping real estate market, the City Fathers had to devise a formula that would be palatable and yet serve the purpose of equalizing values*.
*Just a quick lesson – every 5 years or so, municipalities are required to assess properties at 100% of their fair market value. Then as property values rise and fall, the “assessed value” stays the same and they assign a ratio of assessed value vs. fair market value. The first year it’s 100%. If property values go up by 5%, then the Assessed Value = 95% of Fair Market Value. After about 5 years the ratio gets pretty wacked from reality and they do a re-assessment.
Back to the City Fathers: It would be impossible to RAISE assessed values in a slumping market. The outcry would be horrendous. The panel that reviews contested assessments would be meeting until after the budget season. It just would never do. I would like to give great kudos for their strategy: raise the price of the dirt!!
In a down market, it’s hard to substantiate increased values. The price of the “improvements” hasn’t appreciated. Their strategy? They took the one part of the assessed value that’s hard to argue: the price of the land. Without 3 years of appraisal school, who can argue if your lot is worth $30,000 or $50,000. Who knows? Is it worth more or less, with or without a house on it? What do City lots sell for anyway? What compensating variables affect the value of the land alone? Your improvements, your neighbor’s improvements? The subdivision? There are very few vacant lot sales in established neighborhoods. Would they really set the standard for the value of land all over the City? The bottom line then – whatever number they assigned to your dirt is a slam-dunk for sticking. How can you contest it?? Brilliant!
Filed under: Real Estate
We hear terms bandied about in this real estate market. Everyone knows what a foreclosure is. Some know what REO means – no, it’s not the name of a ‘70s Rock Band (what would that have to do with real estate?). You may have heard the term “Short Sale” and thought it was a quick, fun transaction. It’s not. Short Sales are the longest, most frustrating, unbelievably unforgiving transaction you can enter into!
Here’s the scoop on short sales: Someone wants to sell their home. They owe more than what the property is currently worth. They are “upside down” in their mortgage. When it’s time to sell, they ask the lender to take less money than what is outstanding and consider the mortgage paid off.
The seller may or may not be current with their monthly payments. If they ARE current, the lender will likely require the full balance of the outstanding mortgage. If the seller is BEHIND – the lender has some motivation to take a “short” payoff NOW, rather than inherit the property LATER in foreclosure. Most lenders are willing to consider remedies to avoid a foreclosure. They don’t want the house – they want money.
First of all, if someone wants to (or has to) sell their home and knows they are upside down, one certain way to get the lender’s consideration for a short sale is to stop making their mortgage payments. Yes – their credit will get trashed, but the other option is to pony up, perhaps thousands of dollars, in order to close. If the lender won’t do a short sale, the seller has to make up the difference – ouch!
The seller, in order to be able to move on with their life, STOPS making their mortgage payments. Now the lender will play in the sandbox with them. An offer comes in and the lender is asked to take a short pay-off. Most of these loans are owned by HUGE conglomerates (the ones we’ve been hearing about on the news for months). They are NOT easy to deal with. You never talk to the same person; they never give you the same answer; they lose the paperwork you fax them; they lose the paperwork you carefully scanned, PDF’d and emailed; they won’t call you – you have to call them; they assign the file to a different department; they have to get MORE documentation (you wouldn’t believe!); they have to get two more approvals; the list goes on.
Anywhere from two to five months later – IF the buyer has the patience to wait for what promises to be an open-ended amount of time – there MAY be a closing. By that time, the buyer isn’t in love with the property, the seller is in financial ruin, and the real estate agent is frazzled from being in the middle.
The good news?? IF…..IF….you have the patience, the endurance, the vision, the intestinal fortitude, and the ability to ignore horrendous business practices…. IF…. You are willing to put up with a nightmare transaction – Short Sales are the best bang for your buck!! We’re seeing lenders take hits of 20%-40% of what is owed just to avoid putting these homes in their portfolio. Find a good agent and hang on…. It’s quite a ride, but it can be worth the adventure!
